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BANK THEFT

Tito Mboweni urges parties to take action on VBS scandal

Finance minister chides auditors who turned a blind eye to looting spree and wants politicians to be dealt with

17 October 2018 - 05:06 Bekezela Phakathi

Tito Mboweni. Picture: SUPPLIED

Finance minister Tito Mboweni has called for tough action to be taken against those implicated in the looting scandal.

The minister, who made his maiden appearance before parliament’s standing committee on finance on Tuesday, also called for political parties to take action against their members implicated in one of SA’s biggest banking scandals.

A number of senior provincial politicians in the governing party have been named in the forensic report released last week‚ titled “The Great Bank Heist”. The report detailed how some of the country’s poorest municipalities and the elderly who had deposited their life savings in VBS lost close to R2bn after their deposits were used to fund the lavish lifestyles of individuals linked to the doomed bank‚ including its largest purported shareholder‚ Vele Investments.

Brian Shivambu, younger brother of EFF deputy president Floyd Shivambu, was also caught up in the web, with about R16m said to have been channelled to him.

According to the report compiled by advocate Terry Motau and Werksmans Attorneys on behalf of the SA Reserve Bank, former KPMG partner Sipho Malaba knew about the cash crunch at VBS, but still signed off on its financials, and was paid about R28m by the bank.

The scandal-prone KPMG has been under fire in recent times for its now discredited report into the so-called rogue unit at the SA Revenue Service (Sars) and the work it did for Gupta-linked firms. It continues to bleed staff and clients.

“When you have a big auditing firm failing us in the manner that one has, that is a major concern,” Mboweni told MPs.

Mboweni said it was clear that regulatory authorities had been let down by both internal and external auditors who turned a blind eye to the looting spree, which affected several poor municipalities and the elderly who had deposited their savings in the troubled bank.

“I think we were failed by both the internal auditors and the external auditors … this was part of the heist,” he said.

“We must move with speed … we need to assure the public that we take their deposits seriously … political parties need to move with speed to deal with their members who are found wanting,” said Mboweni.

Mboweni, who took over as finance minister last week after President Cyril Ramaphosa accepted Nhlanhla Nene’s resignation, was leading a Treasury delegation in parliament to discuss his department’s annual report and that of Sars. MPs grilled the Treasury delegation about the VBS scandal. DA MP David Maynier suggested that the government had weak regulatory systems and asked what action would be taken against those implicated and to prevent this from happening again in future.

Mboweni said he would provide more details on how the government plans to deal with the fallout from the VBS scandal when he delivers the medium-term budget policy statement next week.

But doubts remain as to whether law enforcement agencies are sufficiently equipped to deal with the issue.

In August the Hawks, SA’s elite crime-fighting unit tasked with tackling high-profile cases, admitted in parliament that it did not have enough personnel with financial or forensic investigative skills to tackle white-collar crime, forcing the unit to engage auditing firms. Hawks head Godfrey Lebeya said at the time the organisation had advertised various such positions as part of the unit’s restructuring.

Meanwhile, briefing MPs on their annual report, Treasury officials said the department would apply for a condonation in the 2018-2019 financial year relating to irregular expenditure of about R769m.

The Treasury, which is meant to lead by example when it comes to sound financial management in government, was found wanting by the auditor-general in its 2017-2018 annual report, after incurring irregular expenditure amounting to millions of rand.

Treasury director-general Dondo Mogajane told MPs the irregular expenditure could be attributed to a “misplaced memo”, which had contributed R370m of the R769m in irregular expenditure recorded.

“We [are still] in a good state … [however] the R769m of irregular expenditure is a serious issue and we should not be in this space. We should be a model of excellence to other departments and entities,” said Mogajane.